Interest rates have risen again... now what?
The Bank of England has raised interest rates again for the 14th time, now at 5.25%. Along with that, inflation is at an all-time high, and company insolvencies increased by 27% in June. So, while the end of summer is on the horizon, businesses are still feeling the heat, big time. It can be difficult to predict where your clients will be in the next year or two – or how many there’ll be left at the rate things are going.
Let’s discuss some strategies you can use to guide your clients through these stormy economic waters, so they’re not the next companies to throw in the towels.
1. Reassess their budgets
One of the best things your clients can do is take a hard look at their budget. A lot has changed over the past few years, and it's likely your clients’ financial needs have shifted too. Take a look at their profit and losses and balance sheets to identify where they can cut costs. For example, are they paying an extortionate amount on rent? Could they move location or even go the extra mile and become remote to cut down on travel costs? What about switching insurance or energy providers, and other suppliers to reduce overheads? All of these tweaks and sacrifices can help can free up cash flow, improve their bottom line and ease pressure for them in the long run.
Going forward, there should also be more regular cash flow monitoring and forecasting so they’re covered if any surprise payments and unexpected downturns crop up. If they’ve got debt, help them refinance repayment plans if needs be – it could be the difference between staying afloat and going under if interest rates hike again. Providing advice and visibility on these kinds of metrics means clients are more likely to see you as an essential cost – and not one to cut when times are tight!
2. Focus on customer retention
Did you know it can be 6-7 times more expensive to take on a new client versus retaining an existing one? So it’s more important than ever for your clients to turn inward and focus on holding onto their current clientele – and the same goes for your own firm.
There are a million and one ways to go about this, but it all boils down to communication. On your client’s end, they could offer incentives like loyalty programs and referral discounts, or start weekly customer newsletters to provide more value to their customers. On your end, you could book regular slots in your calendar for brief one-to-one check ins. What challenges are your clients facing, and what opportunities do they want to take advantage of? Keep them informed on the latest financial trends and legislation changes, like interest rates, grants and schemes that could potentially affect their business.
By doing this, you’re building trust and value where it’s most needed, and from this, you could even diversify your services by offering personalised financial planning.
3. Create more time in your week to focus on clients
While it’s great to have a proactive approach in your clients’ financial future, you need systems in place so you can prioritise in the right places. This means you’ll have more time in your week to nurture these client relationships.
For example, make sure you’re using an efficient, automated and streamlined tax and compliance, corporate governance, payroll and accounts production software. These will all help to streamline your day-to-day tasks, freeing up that time for consultations and financial planning. On a more practice-wide level, using a practice management software can help manage your team’s workflow, store digital files, and chase up clients, saving you hours of admin work each week.
So while the current stats of company insolvencies seem daunting, this economic climate could also an opportunity to make a real difference for your clients.
Here at Bright, we create software for tax, compliance, practice management and payroll, and are on a mission to make a happy and efficient working life a reality for accountants through reliable software and amazing support.
Want to see our multi-award-winning product suite in action? Book a quick 15-minute demo of any of our software you like.
For a more in-depth look into how you can shield your firm from economic downturns, view our free guide.
Written by Eleanor Vaughey | Bright
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Bright was created in 2021 when Thesaurus Software Ltd. and Relate Software Ltd. decided to join forces. Bright is a leading provider of accounting, payroll, tax and HR solutions to businesses across the UK and Ireland. We help thousands of accountants, bookkeepers and small to mid-sized businesses become more productive and efficient with our...